Curbing inflation through tight monetary policies

Key CCC proposal for 2009 Budget:

by Lalin FERNANDOPULLE

[email protected]
 

Curbing inflation growth through tight monetary policies is one of the key proposals presented to the government for the 2009 Budget, said Vice Chairman, Ceylon Chamber of Commerce (CCC), Dr. Anura Ekanayake.

He said high inflation has pushed interest rates upwards and dampened investments.

The fundamental issues that impede investment and growth need to be addressed to encourage more investments and achieve the growth targets set out in the government’s development plan.

In this backdrop the Chamber’s budget submissions reiterated the need for good infrastructure facilities to attract investments particularly to the region. The proposals stressed the need to expedite the implementation of the coal power plant and the Colombo South Port Expansion project.

“Excessive budget deficits caused by high recurrent expenditure increases interest rates due to deficits being financed by domestic borrowing.The Chamber has proposed that the government should take measures to reduce wasteful expenditure”, Dr. Ekanayake said.

A culture of avoiding waste should be promoted among citizens with the leadership setting the example.

He said the Chamber is concerned about the decline of the growth rate in industrial production since 2006. Industrial exports dropped during the first six months of this year due to high inflation, energy cost, interest rates, stable currency and slow down of the global economy. The CCC in its submission has focused on export development, promotion of renewable energy, agricultural and infrastructure development.

Senior Economist CCC, Gayathri Gunaruwan said the country’s import expenditure on fuel and food has to be reduced by promoting renewable indigenous energy sources and increasing agricultural production. “Incentives for more investments in agriculture and the involvement of the private sector in agro processing, storage, transportation and other value added sectors will help increase farm gate prices”, she said.

The Chamber has stressed the need for more attention on alternative energy sources and energy efficiency in the context of high global fuel prices. She said economic growth in the country has been confined to the Western province. While agreeing with the government’s vision to develop the rural economy, the Chamber believes that the path to rural development is through forging links between the private sector and the SMEs.

Development of rural infrastructure and facilitating access to land for business activities will take development beyond the Western province to the peripheries and set up links across all provinces.

Meanwhile, an official of the Finance Ministry said the Government will accelerate the development process including the liberated areas by increasing the allocations for vital sectors linked to development.The government has allocated Rs. 748 billion of the Rs. 925 billion to develop key sectors.